Ion Audio to the rescue! Maybe you know these guys for their clever iCade retro gaming cabinets, the ones that look like mini arcade machines with actual knob-ended joysticks and big round buttons you have to jab with your fingers instead of your thumbs. Well they just announced something called the “iCade Mobile,” basically a wraparound gamepad into which you slide your iPhone 4 or iPod Touch (horizontal orientation), after which — presto! — instant d-pad on the left, four-button diamond-style array on the right. Cost: $80.

I haven’t tried one — for that, I’m depending on my esteemed CES-bound colleagues (Doug, Harry or Jared) where this thing just made a splash. I’ve been waiting for something like it for years, long before I bought my first iPhone last February. In fact it’s part of why I waited to go iPhone this long. In an ideal world, my phone and handheld games device are the same thing (also in my ideal world: Nintendo’s releasing iOS titles — for now, I’ll settle for one out of two).

The iPhone arrived in June 2007, and to date, no one’s released an accessory to let you play the thing like a proper handheld game system. By contrast, Nintendo’s 3DS has been out for less than a year, and Nintendo themselves announced a wraparound gamepad accessory last September. For shame, Apple, but I’m even more disappointed in the third-party scene.

I couldn’t say what’s taken the aftermarket side this long to act when the concept sounds so forehead-smacking obvious. The question of whether spatially complex 3D games work well on touchscreens is settled science (short version: they don’t). Ergo devices like Sony’s PS Vita and the Nintendo 3DS, both facing stiff competition in Apple’s iPhone and from Google’s Android lineup, but not because gamers wouldn’t rather have their cake (all-in-one phone/gaming device) and eat it, too (physical gamepad controls).

Think of the possibilities. I’m assuming most traditional handheld game developers either do iOS ports of popular console titles or avoid iOS forklift-jobs entirely because they can’t depend on that traditional, frankly unsurpassable gamepad interface. Think what they might do and what they might release into iOS’s flourishing app space if they could. Or consider all the stuff already there that’d work better with iCade Mobile support.

Dream with me a little. Imagine something like The Elder Scrolls V: Skyrim on your iPhone, a game that’s only 3.8GB, fully installed, on the Xbox 360. Imagine the iPhone’s screen growing a tick or two, from 3.5-inches diagonally to something Galaxy Nexus-sized, say 4.5-inches (half an inch shy of the Vita’s sumptuous 5-incher). Imagine Apple either upping the entry-level storage space to 64GB (topping out at 128GB, say, or 256GB) or adding the option to stick in memory cards. Then imagine a company like Ion Audio one-upping the iCade Mobile by adding what I think we’d all agree is still missing here: a paid of analog thumbsticks. Remember, Apple’s been releasing faster iPhones every year. Give the iPhone a durable gamepad-style interface that lets it really compete head-to-head with the Vita and 3DS (I could care less about 3D, sorry Nintendo), then sit back and watch the fireworks.